Thanks to easy approvals for a car loan in Canada, the car business is driving tens of thousands of dollars of vehicle purchases in Canada each day. Over the years, there has been tremendous growth in demand for new vehicles and competition in the market, as numbers have increased to $11.9 billion in 2022.

A car is a necessity for almost everybody. Whether you are a college student or working full-time, you will always have to have a car. So if you plan on buying one, deciding the financing of your car should be your #1 priority. This article will help you find the smartest way to finance a vehicle in Canada.

Should You Buy a Vehicle Using Personal or Car Loan in Canada?

A personal or car loan is usually what most people use to finance their vehicles. Both of these loans have their merits and demerits, and depending on your certain situation, you can select the one. Here are their pros and cons:

Personal Loan:

Pros:

• You are not limited to purchasing a specific car (you have flexibility as long as you have enough money)

• You don’t need to put your car as collateral (it’s an unsecured loan)
• You will own the car from day one
• The terms are fixed, so you’ll know the length of the term and interest rate in advance

Cons:

• Since it’s an unsecured loan, you’ll end up paying a higher interest rate

Car Loan:

Pros:

• The lower interest rate with longer terms (up to 84 months or more)
• Higher chances of approval and sometimes you get funding the same day
• Requirements for loan qualification are more relaxed

Cons:

• Your car will be put as collateral, so you don’t own it until the loan is repaid
• You cannot use this money to purchase anything else, only a vehicle

So What’s The Smartest Way to Get a Car Loan in Canada?

As mentioned before, this depends on your personal preference between personal and auto loans. However, we suggest going for a car loan in Canada because it offers more flexibility.

Furthermore, the smartest way to go about it is to get pre-approved. This way, you’ll know exactly how much money you’ll be getting depending on your credit score. 

The main benefit of pre-approval is that you will have a number in front of you to focus on a particular car. Plus, when you walk into the dealership, you will know how much money you can spend, giving you better-negotiating power. 

Parting words:

Getting a car loan in Canada is not too complicated if you have a good credit score (over 660). However, those with bad credit can always put more money towards a down payment to get better car loan rates and payment terms.

Plus, you can also ask a friend or family member to co-sign to increase your chances of approval if that’s what’s stopping you from getting your favorite car.